An analysis of value investing determinants under the behavioural finance approach

WHAT WAS DONE? This study researches the success of several value investment strategies in the stock markets of the United Kingdom and Germany based on nine firm fundamentals that are extracted from listed firms annual financial statements. In this regard, we first examine alternative forecast combination methods in a novel way to utilise fully the financial information at hand. Second, we examine the drivers of investment returns, particularly the role of information uncertainty, for which a new direct measure is developed. Finally, we evaluate the performance of these financial health investment strategies in alternative institutional environments by focusing on the differences between the two markets regarding both their corporate culture and their legal environment. WHY WAS IT DONE? Similar to economics, the discipline of finance is a social science because its observations emanate from economic transactions between humans. Nevertheless, a significant part of the research in this area is undertaken by means that are almost exclusively applied to the natural sciences, such as mathematics or physics. Although the reasons seem manifold, an increased form of scientificity, in conjunction with greater credibility of the research process and results, is deemed to be of primary importance. However, the benchmark for evaluating these research outcomes differs from those used in the natural sciences. From the example of the efficient market hypothesis one can see that alternative research results that cast serious doubt upon efficiency per se are disregarded as aberrations, leading to the assumption that the hypothesis in its entirety is more or less valid. This study assumes that inefficiencies in the stock market do exist for prolonged periods of time and investors are actually able to benefit from them. HOW WAS IT DONE? Secondary financial statement data of listed companies in the United Kingdom and Germany were downloaded from Datastream for the period between 1992 and 2010. A quantitative analysis of the significance of the correlation between groups of firms with similar financial characteristics and their one-year-ahead stock returns was subsequently performed. Various combination methods for differential weighting of individual financial statement items were conducted. The aim was to increase the profitability of the investment strategy. WHAT WAS FOUND?In general, a classification of stocks according to certain internal criteria of financial health is capable of separating future winners from losers and at the same time confirms the results of a previous US study. More specifically, we first show that a wide range of combination methods generate profitable investment strategies whereby especially measures of profitability are the central indicator of a firm s future performance. Secondly, the more complex methods neither consistently nor substantively outperform the simpler methods. Thirdly, information uncertainty does not seem to be the prime driver of the profitability of an investment strategy. Lastly, we show that financial health investment strategies are profitable both in market-oriented, common law settings and in bank-oriented, code law settings

Is Overoxidation of Peroxiredoxin Physiologically Significant?

Eukaryotic peroxiredoxins are highly susceptible to sulfinic acid formation. This overoxidation, which is thought to convert peroxiredoxins into chaperones, can be reversed by sulfiredoxins. Several organisms, including Caenorhabditis elegans, lack sulfiredoxins but encode sestrins, proteins proposed to be functionally equivalent. We induced peroxiredoxin overoxidation in C. elegans with a short peroxide pulse. We found that reduction of overoxidized peroxiredoxin 2 (PRDX-2) was extremely slow and sestrin-independent, strongly implying that worms lack an efficient repair system. Analysis of PRDX-2's overoxidation status during C. elegans lifespan revealed no accumulation of overoxidized PRDX-2 at any point, questioning whether PRDX-2 overoxidation in worms is physiologically relevant. Antioxid. Redox Signal. 14, 725-730.Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/90505/1/ars-2E2010-2E3717.pd

Study protocol for a multi-center RCT testing a group-based parenting intervention tailored to mothers with borderline personality disorder against a waiting control group (ProChild*-SP1)

Background/aims Borderline personality disorder (BPD) is a severe mental disorder characterized by an unstable sense of self, intense and rapidly changing affect, as well as impulsive and self-destructive behaviors. Interpersonal relationships of individuals with BPD are characterized by marked instability, a lack of dependability, and quick changes between love and hate. For children of individuals with BPD, this can lead to permanent stress and attachment insecurity and an increased risk of adverse physical and mental health development. To reduce dysfunctional parenting and improve positive parenting, and in turn, to promote healthy child development, a group intervention for mothers with BPD was developed. This study aims to evaluate this first disorder-specific parenting intervention for BPD in a randomized controlled trial. Method In a parallel-group, two-arm, randomized controlled trial, an initial N = 178 mothers diagnosed with BPD and their children aged 6 months to 6 years are assigned to either the parenting intervention or a waiting control group. If taking place, participants of both groups continue their regular treatment for BPD diagnosis (e.g., individual therapy, medication). The primary outcomes are changes in parenting from baseline (day 0) to post intervention (week 12) and follow-up (6 months after group intervention; month 9). The waiting control group can attend the group intervention at the end of all assessments. Participants allocated to the intervention group are expected to show improvement in their parenting and a reduction in child abuse potential. Maternal emotion regulation and mental distress are analyzed as secondary outcomes. Discussion Mothers with BPD may need tailored help when reporting difficulties raising their children. The first disorder-specific parenting intervention has been developed to close this gap. ProChild is part of a large government-supported consortium, which aims to investigate different aspects of abuse and maltreatment in childhood and adolescence

Why does early childhood deprivation increase the risk for depression and anxiety in adulthood? A developmental cascade model

Abstract Background: Using data from the English & Romanian Adoptees (ERA) study we recently reported that early time-lmited exposure to severe institutional deprivation is associated with early onset and persistent neurodevelopmental problems and later onset emotional problems. Here we examine possible reasons for the late emergence of emotional problems in this cohort. Our main focus is on testing a developmental cascade mediated via the functional impact of early-appearing neurodevelopmental problems on late adolescent functioning. We also explore a second putative pathway via sensitization to stress. Methods: The ERA study includes 165 Romanian individuals who spent their early lives in grossly depriving institutions and were subsequently adopted into UK families, along with 52 UK adoptees with no history of deprivation. Age six years symptoms of neurodevelopmental problems and age 15 anxiety/depression symptoms were assessed via parental reports. Young adult symptoms of depression and anxiety were assessed by both parent and self-reports; young adults also completed measures of stress reactivity , exposure to adverse life events and functioning in work and interpersonal relationships. Results: The path between early institutional deprivation and adult emotional problems was mediated via the impact of early neurodevelopmental problems on unemployment and poor friendship functioning during the transition to adulthood. The findings with regard to early deprivation, later life stress reactivity and emotional problems were inconclusive. Conclusions: Our analysis suggests that the risk for adult depression and anxiety following extreme institutional deprivation is explained through the effects of early neurodevelopmental problems on later social and vocational functioning. Future research should more fully examine the role of stress susceptibility in this model

Oxytocin and the stress buffering effect of social company: A genetic study in daily life

Social relationships are a crucial determinant of both mental and physical health. This effect is partly due to social buffering of stress. Animal studies suggest that social buffering is mediated via the oxytocin system, while studies in humans are sparse and limited by the low ecological validity of laboratory settings. In the present study, participants (N = 326) completed smartphone questionnaires four times a day over 4 to 5 days, measuring stressors, negative affect, and social context to assess social buffering. We found that under stress, participants reported a higher need for social company. Further, the impact of prior stressful events on momentary negative affect was attenuated by the perceived pleasantness of current social company. This social buffering effect was moderated by haplotypes of the oxytocin receptor gene, based on two well-described single nucleotide polymorphisms (rs2268498, rs53576). Effects were robust when controlling for gender and age, applying different data quality criteria, and even apparent in genotype-based analyses. Our findings demonstrate that social buffering and its modulation by oxytocin system characteristics have implications for life as lived outside the laboratory

Effects of Oxidative Stress on Behavior, Physiology, and the Redox Thiol Proteome of Caenorhabditis elegans

Accumulation of reactive oxygen species has been implicated in various diseases and aging. However, the precise physiological effects of accumulating oxidants are still largely undefined. Here, we applied a short-term peroxide stress treatment to young Caenorhabditis elegans and measured behavioral, physiological, and cellular consequences. We discovered that exposure to peroxide stress causes a number of immediate changes, including loss in mobility, decreased growth rate, and decreased cellular adenosine triphosphate levels. Many of these alterations, which are highly reminiscent of changes in aging animals, are reversible, suggesting the presence of effective antioxidant systems in young C. elegans. One of these antioxidant systems involves the highly abundant protein peroxiredoxin 2 (PRDX-2), whose gene deletion causes phenotypes symptomatic of chronic peroxide stress and shortens lifespan. Applying the quantitative redox proteomic technique OxICAT to oxidatively stressed wild-type and prdx-2 deletion worms, we identified oxidation-sensitive cysteines in 40 different proteins, including proteins involved in mobility and feeding (e.g., MYO-2 and LET-75), protein translation and homeostasis (e.g., elongation factor 1 [EFT-1] and heat shock protein 1), and adenosine triphosphate regeneration (e.g., nucleoside diphosphate kinase). The oxidative modification of some of these redox-sensitive cysteines may contribute to the physiological and behavioral changes observed in oxidatively stressed animals. Antioxid. Redox Signal. 14, 1023-1037.Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/90439/1/ars-2E2010-2E3203.pd

The OXTR Single-Nucleotide Polymorphism rs53576 Moderates the Impact of Childhood Maltreatment on Empathy for Social Pain in Female Participants: Evidence for Differential Susceptibility

Previous research has associated genetic variations of the oxytocin receptor with individual differences in human social behavior. Specifically, homozygous carriers of the G-allele of the single nucleotide polymorphism rs53576 have been reported to display more trust, empathy, and prosocial behavior and were less sensitive toward stress and maltreatment during childhood when compared to A-allele carriers. With regard to Borderline Personality Disorder (BPD), a psychiatric condition that is often associated with the experience of childhood adversity, it has been suggested that A-allele carriers are more vulnerable to developing psychopathological signs and symptoms. In the present study we investigated whether childhood trauma, as assessed by the Childhood Trauma Questionnaire (CTQ), affects empathy for somatic and psychological pain, and how this is moderated by genotype, in a sample of 302 individuals (148 of whom were diagnosed with BPD). We found a three-way interaction between genotype, group and pain condition. Posthoc comparisons revealed that patients with BPD carrying at least one A-allele, rated psychological pain as more intense compared to controls, whereas no difference between groups emerged in GG homozygotes. Moreover, a moderating effect of genotype appeared on the impact of childhood trauma on empathy for psychological pain. In addition, a positive correlation of CTQ scores and empathy appeared only in A-allele carriers (GA + AA), independent of diagnosis. Together, A-allele carriers, especially those with BPD, seemed to be responsive to the impact of adversity on empathy-for-pain, while GG homozygotes were not, which is compatible with the idea of differential susceptibility

Risk and protective factors of mental health in children in residential care: A nationwide study from Luxembourg

peer reviewedBackground: Children who grow up in residential care are at high risk for mental health problems. Existing studies have focused on negative mental health indicators and risk factors. There has been less emphasis on identifying protective factors, particularly those associated with positive mental health outcomes. Objective: This study explores positive and negative dimensions of mental health and their links to risk and protective factors in children who have experienced early adversity and trauma and have been placed in residential care. Participants and settings: Children aged 11 to 18 (N =264) were recruited from residential care homes in Luxembourg, a small, high-income European country. Methods: The children completed self-report questionnaires on mental health, perceived stress, school pressure, and participation. Residential care workers provided information on demographic factors, developmental and care history, and pre-care experiences of early adversity and trauma. Results: Confirmatory factor analysis indicated that subjective well-being, internalising problems, and externalising problems are separate yet interconnected components of mental health. Multiple Indicators Multiple Causes models showed that individual, contextual, and psychosocial predictors contribute differentially to positive and negative mental health outcomes. Conclusions: Using a national sample of children in residential care in Luxembourg, this research indicates that subjective well-being, internalising problems, and externalising problems are distinct but related aspects of mental health. ‘Child participation’ and ‘school pressure’ displayed strong links with positive mental health outcomes and may serve as a potential path for improving public health interventions for children in care.HER